LCH.Clearnet has made its second move in as many weeks to push for plans that would allow Europe's clearing houses to compete with each other, a decision that is likely to benefit the Anglo-French firm from increased business.

The Anglo-French clearing house yesterday disclosed details of an agreement it has with Swiss rival Six x-clear, which it signed 18 months ago. The deal, signed in December 2008, allows traders buying shares on the London Stock Exchange or the Six Swiss Exchange to choose either LCH.Clearnet or Six x-clear to clear their deals.

Clearing is a process whereby a central counterparty sits in the middle of a trade, ensuring it completes in case either side defaults. In most circumstances, traders do not face a choice as to which clearing house they can use.

LCH.Clearnet's so called "interoperability" agreement with Six x-clear is the only one of its kind in Europe, although has been held as a potential blueprint for future agreements. In November 2006, a code of conduct was agreed between Europe’s clearing houses and exchanges, which raised the possibility of forcing Europe's clearing houses to compete with each other, in order to bring lower post-trade fees to the region's equities markets.

However, efforts to bring about this "interoperability" were stalled in November last year when the UK regulator the Financial Services Authority, along with its counterparts in the Netherlands and Switzerland, raised concerns about systemic risk. They argued the collapse of one provider could affect the entire market if clearing houses are linked.

However, LCH.Clearnet - which is likely to be a beneficiary of increased competition as it is one of Europe’s most established clearing houses - believes that if its agreement with Six x-clear is used as a basis for interoperability, then potential risks can be mitigated. which the The clearer describes the agreement as “a proven model which successfully withstood the Lehman default”.

Wayne Eagle, director of equity services at LCH.Clearnet, said that the move to disclose of its agreement with Six x-clear gives a "greater degree of transparency" to regulators and other clearers.

He added that both of the clearing houses “continue to advocate competitive clearing across the European equities market”.

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Included in the agreement is the ability of each party to reject trades which do not meet its eligibility criteria, as well as appropriate limitations on the scope of liability each party has to the other, to avoid unreasonable exposures.

The release of the agreement with Six x-clear follows its submission of a 500-page report to the FSA last month, in which the Anglo-French clearer advocates the ability of clearing houses to link up with another.

• Separately, LCH.Clearnet today announced that it is adding the clearing of over-the-counter coal swap contracts to its energy and freight business later this month. Isabella Kurek-Smith, director of the LCH.Clearnet energy and freight business said: “With the coal market continuing to grow rapidly, introducing coal swaps to our broad range of existing OTC commodities, which include emissions, freight and iron ore swaps, is a valuable addition."